Explore ways to share your wealth through your estate
This guide describes what your estate is and explores ways to share your wealth with the family, friends, and institutions you choose.
The guide explains how you can use wills, trusts, gifts and beneficiary designations to distribute your assets and examines strategies for minimizing estate and income taxes.
what’s your estate?
An estate isn’t just expensive property surrounded by a fence.
Your estate is everything you own in your own name, and your share of anything you own with other people. Your property can be real— meaning land and buildings—or personal, such as jewelry, a stamp collection, or a favorite table or chair. Money is property, too, as are stocks and bonds, a mutual fund account, or a life insurance policy.
The actual value of your estate is computed only after you die—when you’re not around to figure it out. But it isn’t a mystery. The idea behind estate planning is that you know what you own, what it’s worth, and what you want to happen to it—both during your lifetime and after your death. If your estate is large enough, you may have to do some tax planning as well.
Leaving Your Estate
Since you own the property in your estate, it’s your right to say what will happen to it. You might tell your spouse, your children, or your lawyer what you want to happen, but unless it’s written down, there’s no assurance your wishes will be respected. There are several ways to make clear what you want to happen to your estate.
You can write a will to specify who gets what after you die
You can create one or more trusts to pass property, or income from that property, to others
You can name beneficiaries on pension funds, insurance policies, and other investments so they will receive the payouts directly
You can own property jointly with other people, so that it becomes theirs when you die
what’s in a name?
if your estate includes everything you own, you want to be pretty clear about what ownership means.
Most people think of real property when the subject of ownership comes up, but all kinds of property—bank accounts, stocks, mutual funds—can be owned in a variety of ways. The way you own your property determines the flexibility you have to sell it while you’re alive, and also what happens to it after you die. Basically there are four ways to be a property owner:
By yourself, as a sole owner
As a joint owner
In an arrangement called tenants by the entirety
As tenants in common
In addition, if you’re married and live in a community property state, half of what you buy or earn during your marriage legally belongs to your spouse.
JT TN W/ROS
This cryptic acronym, which frequently appears on bank accounts and mutual fund statements, stands for joint tenants with rights of survivorship. It means that both owners have equal access to the property while they’re alive, and the property belongs to the survivor when one of them dies. For example, if you and your mother have a joint checking account with survivorship rights and your mother dies, the money is yours.